Calculate the required rate of return for manning enterprise

Assignment Help Financial Management
Reference no: EM13880934

Calculate the required rate of return for Manning Enterprises assuming that investors expect a 3.5% rate of inflation in the future. The real risk-free rate is 1.5%, and the market risk premium is 5%. Manning has a beta of 2.8, and its realized rate of return has averaged 15% over the last 5 years. Round your answer to two decimal places.

Reference no: EM13880934

Questions Cloud

What is cost of existing-new preferred stock respectively : A firm's preferred stock is selling for $27.50 a share. The firm nets $25.60 after issuance costs. The stock pays an annual dividend of $3.00 per share. What is the cost of existing, and new, preferred stock respectively?
Explain desired skills and how they relate to the classroom : Explain the desired skills and how they relate to the classroom and home
Calculate the differences in cost and risk : Explain with examples how the cost of capital is determined. Calculate the differences in cost and risk. Explain why the costs and risks of external financing are important for the organization to understand. Explain why rapid growth plans are import..
Mortgage loan to buy the home : You decide to take out a 30-year mortgage loan to buy the home of your dreams. The home purchase price is $1,000,000. You manage to scrape together a $200,000 down payment and plan to borrow the balance of the purchase price. If you sell your house i..
Calculate the required rate of return for manning enterprise : Calculate the required rate of return for Manning Enterprises assuming that investors expect a 3.5% rate of inflation in the future. The real risk-free rate is 1.5%, and the market risk premium is 5%. Manning has a beta of 2.8, and its realized rate ..
Would you conclude that the water table was falling : A second expert suggests yearly rainfall also may affect the water table. The first expert agrees but argues that total rainfall fluctuates randomly from year to year. Rainy years would cancel out dry years and would not affect the results of the ..
Discuss the strengths and weaknesses of each crime : In a 2-3 page paper, complete the following: Select and discuss three (3) theories of crime. Discuss the strengths and weaknesses of each crime. Compare and contrast how well they explain variations in crime rates
Production opportunities? and risk? and inflation : What factors affect the cost of money? Use at least one outside source. You may form your own opinions as well but support them with research. I need examples to understand the four factors please.  Production Opportunities  - the returns available w..
Cook textiles leased a building with two acres : 1.On January 1, 2013, Cook Textiles leased a building with two acres of land from Peck Development.

Reviews

Write a Review

Financial Management Questions & Answers

  How much should he set aside today for the purchase

Stephen plans to purchase a car 5 years from now. The car will cost $55,339 at that time. Assume that Stephen can earn 5.16 percent (compounded monthly) on his money. How much should he set aside today for the purchase?

  The price of a share of common stock when it was sold

ABC Corp. provides you with the following data: Sales: $500,000; Operating profit: $300,000; Interest expense: $25,000; Net Income: $100,000; Common stock (par): $10,000; Paid-in capital in excess of par: $210,000; total number of common shares outst..

  Correctly states the resulting change in the equity accounts

Why should managers assume they will receive a fair price for any new shares that their firm issues? A firm just issued 15,000 new shares of stock with a market price of $14 per share and par value of $2 per share. Which one of these correctly states..

  Dcf valuation and ownership concepts

The venture investors and founders of the ACE Products venture, a closely held corporation, are contemplating merging the successful venture into a much larger diversified firm that operates in the same industry. ACE estimates its free cash flows tha..

  Why are mutual funds popular with individual investors

Darby Minerals wants to hire an investment banker to sell 2 million shares of stock to the public. Darby is considering using either a firm commitment or a best efforts offering. Why are mutual funds popular with individual investors?

  The original purchaser of this investment

The original Barbie doll was introduced in 1972 and sold for approximately $3.00. In year 2015, a mint-condition doll in its original box would be listed on EBay at approximately $700.00. What average annual rate of return would the seller realize if..

  Common concern in producing accurate research results

Bias (or systematic error) is a common concern in producing accurate research results. What can the researcher to do to solve this problem? A: Interpret results along with bias B: strive to minimize or eliminate bias C: Ignore the Bias D: Pursue samp..

  Investment account at the end of every month

Suppose you deposit $40 into an investment account at the end of every month for four years. If the interest rate on the account is 7.32% compounded monthly, how much will be in the account at the end of four years?

  Determine the payback period for each machine

Payback comparisons Nova Products has a 5-year maximum acceptable payback period. The firm is considering the purchase of a new machine and must choose between two alternative ones. Determine the payback period for each machine. Comment on the accept..

  It cost you to buy seat if company uses straight votind

After successfully completing your corporate finance class, you feel the next challenge ahead is to serve on the board of directors of Schenkel Enterprises. Unfortunately, you will be the only person voting for you. If Schenkel has 445,000 shares out..

  Systematic versus unsystematic risk

Systematic versus Unsystematic Risk (LO2, CFA4) Consider the following information on Stocks I and II:

  The type of ratio that indicates the firms ability

The type of ratio that indicates the firm’s ability to provide adequate returns in the form of dividends and share price appreciation is:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd